U.S. President Joe Biden on Tuesday put electric vehicles and EV battery technology at the center of a package of new tariffs designed to protect U.S. manufacturers – and especially auto workers in the election swing state of Michigan – from Chinese competition.
For now, the new 100% tariff aimed at imported Chinese EVs is mostly symbolic and best understood in the context of Biden’s efforts to counter rival Donald Trump’s aggressive posturing on U.S.-China trade.
The Polestar 2 and the Volvo S90 Recharge plug-in hybrid are the two main Made in China vehicles sold in the United States that would be hit by the new duties. The bargain-priced Volvo EX30, a Tesla Model Y competitor due to launch in the U.S. market this summer, could get caught by the new tariffs as well.
(Ford’s combustion Lincoln Nautilus and the Buick Envision SUV are the two other Made in China models listed in U.S. government data.)
Proposed tariffs on Chinese EV batteries, battery materials, semiconductors and permanent magnets used in EV motors could have a broader impact. (The full list of targeted goods is here.)
Tesla, the Motor City Three and other automakers rely on Chinese materials for their North American-assembled EVs – Ford’s Mustang Mach-E (built in Mexico) is listed at 51% Chinese content, for example.
Biden’s action parallels threats from the European Union to hit Chinese EVs with steeper duties. Both Washington and Brussels accuse China of improperly subsidizing its clean tech sector, fostering huge over-capacity and encouraging Chinese producers to dump their wares in foreign markets.
Beijing denies all of this and has threatened retaliation.
In Europe, Beijing took aim at French cognac. The U.S. economy offers more targets tor Chinese trade warriors. U.S. companies shipped $148 billion worth of products to China last year – including Tesla luxury EVs and BMW and Mercedes SUVs.
Could Chinese officials take aim at a high-profile product made in Michigan or another presidential election battleground state? Sure they could.
Tariffs that protect manufacturers and their workers don’t always benefit consumers. When it comes to electric vehicles, an added risk is that tariffs could slow U.S. adoption of cleaner cars even more and put U.S climate goals at risk.
Trade wars can have complex consequences, as was the case with the U.S.-Japan auto trade clashes of the 1980s. Faced with so-called “voluntary” limits on the numbers of vehicles they could ship to the United States, Toyota, Honda and Nissan decided to build factories and supply chains inside the U.S. trade walls.
The success of U.S.-built Japanese brand vehicles forced the Motor City Three to slash thousands of jobs and shutter dozens of factories during the 1980s and 1990s.
Toyota’s Georgetown, KY assembly plant, opened in 1988, just launched the ninth generation of the U.S.-made Camry sedan. In the same week, GM killed off its last Camry competitor, the low-selling Chevy Malibu.
Fast forward to today, and Chinese EV leader BYD is about to make the nightmares of Tesla CEO Elon Musk and his Detroit rivals come true by announcing plans to build an electrified pickup truck in Mexico.
BYD has not said that it will ship the Shark pickup to the United States. But a Mexican BYD assembly plant supported by a Chinese-built Mexican supply chain could transform a hypothetical threat into a real one.
